Tax Type
Retail Sales and Use Tax
Description
Audit sample techniques
Topic
Taxpayers' Remedies
Date Issued
09-11-1990
September 11, 1990
Re: §58.1-1821 Application: Sales and Use Tax
Dear ****
This will reply to your May 31, 1990 letter in which you submit an application for correction of a sales and use tax assessment issued to ******(the "Taxpayer") as the result of a recent audit.
FACTS
The Taxpayer is in the business of selling computer parts and paper products. The Taxpayer was audited for the period of December 1986 to November 1989. The Taxpayer contests the sample period and the resulting error factor utilized by the auditor. The Taxpayer maintains that invoices for sales resulting from an agreement with ***** (the "Company"), which became effective in the sample month, were improperly included in the percentage of error computation.
The Taxpayer requests that the invoices of the Company be excluded from the computation of the sales tax percentage of error. Further, the Taxpayer requests a refund of taxes and interest assessed based on the incorrect error factor.
DETERMINATION
Despite the Taxpayer's contentions, I find no basis for the removal of charges to the Company from the audit sample. The courts have held that a tax assessment by proper assessing authorities is Prima facie correct and the burden is upon the taxpayer to prove that the assessment is incorrect. The Taxpayer has not met this burden.
The Taxpayer agreed to the use of November 1989 as a sample month for reasons that were beneficial to both the Taxpayer and the auditors. The fact that the Company was not a customer during the entire audit period does not by itself render the sample inaccurate inasmuch as the sales to the Company included in the sample are apparently of the same nature as sales to other customers during the audit period. While the Company made purchases during the sample period but not throughout the entire audit period, there are likely other regular customers who did not make purchases during the sample period.
However, I am asking the department's Technical Service Section and ********* Virginia District office to review the Taxpayer's audit and enlarge the sample period. Please contact the department's Technical Service Section, office Services Division, P.O. Box 6-L, Richmond, Virginia 23282 within the next 30 days to arrange for a revisit by the auditor. Upon securing additional documentation from the Taxpayer, any necessary changes will be made to the error factor and a revised assessment issued to the Taxpayer. Otherwise, the instant assessment will remain unchanged.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner